ICYMI: URBAN INSTITUTE: AMERICAN RESCUE PLAN WOULD REDUCE PROJECTED POVERTY RATE BY MORE THAN ONE-THIRD

Federal Investment In American Rescue Plan Would Reduce Black Poverty By 42%, Hispanic Poverty By 39%, White Poverty By 34%

The American Rescue Plan, the most substantial federal investment for American workers, families, and communities in decades, would reduce the projected poverty rate for 2021 by more than one-third, according to a new analysis from the Urban Institute.

The legislation would reduce projected poverty rates by more than half for children and for people in households experiencing job loss, and would also reduce Black poverty by 42%, Hispanic poverty by 39%, and white poverty by 34%. 

The Urban Institute credits four public investments made within the American Rescue Plan for the significant projected reduction in poverty rates:

  1. The “extension of pandemic-related unemployment insurance benefits”

  2. The “extension of higher Supplemental Nutrition Assistance Program benefits”

  3. “$1,400 recovery rebate payments” 

  4. The “advance portion of the increased child tax credit”

Urban Institute: 2021 Poverty Projections: Assessing Four American Rescue Plan Policies
Four key elements of the American Rescue Plan Act would reduce the projected poverty rate for 2021 by more than one-third. In an earlier analysis, we projected that without this legislation, the 2021 annual poverty rate would be 13.7 percent.  We project that key elements of the American Rescue Plan would reduce that annual poverty rate to 8.7 percent. The policies would reduce poverty by more than half for children and for people in households experiencing job loss. Poverty would fall about 42 percent for Black, non-Hispanic people, 39 percent for Hispanic people, and 34 percent for white, non-Hispanic people, reducing the disparities in poverty rates for Black, non-Hispanic people and Hispanic people relative to white, non-Hispanic people.

Our estimates include the effects of the American Rescue Plan Act’s (1) extension of pandemic-related unemployment insurance benefits, (2) extension of higher Supplemental Nutrition Assistance Program benefits, (3) $1,400 recovery rebate payments, and (4) advance portion of the increased child tax credit. Our projections, developed using the Urban Institute’s Analysis of Transfers, Taxes, and Income Security (ATTIS) model, assess the impacts of these provisions on families’ economic well-being using the Supplemental Poverty Measure.

For the baseline 2021 poverty projections—without the new legislation—see https://www.urban.org/research/publication/2021-poverty-projections.

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